GlaxoSmithKline is weathering several challenges amid the COVID-19 pandemic, including lackluster sales and pressure from activist shareholders to revamp the company. Undeterred, GSK is pushing forward and, like other drugmakers, betting on a strong recovery in the second half of the year.
GSK reported sales of £7.42 billion ($10.28 billion) during the first quarter, an 18% decline compared with the same quarter last year. While the company’s adjusted earnings of 22.9p per share came in above analysts’ estimates, the drugmaker's sales fell short of expectations.
Several factors hindered the drugmaker’s year-over-year performance, including stockpiling during the same quarter last year, disrupted vaccine schedules and a weaker cold and flu season, executives said.
The prioritization of COVID-19 vaccine rollouts caused a “significant disruption” for GSK’s blockbuster shingles vaccine Shingrix, especially in the U.S. where federal regulators suggest a two-week buffer between the two shots, Luke Miels, GSK’s president of pharmaceutical, told analysts on a conference call.
Shingrix sales slid nearly 50% compared with the same quarter last year, though Miels maintained the drop was merely a “timing issue." Demand for Shingrix is expected to make a strong recovery in the year’s second half, he said.
GSK is also counting on recently FDA-approved HIV drug Cabenuva, the world’s first complete long-acting, injectable HIV regimen, to help bolster its performance over time.
“As expected, a challenging start to the year,” CEO Emma Walmsley said on Wednesday's conference call. “But with the pandemic impact starting to reverse in the current quarter, we’re confident we’ll deliver a very different quarter in the second half of the year.”
Like GSK, other big pharma players such as Amgen and Eli Lilly struggled during the first quarter but promised stronger results as the pandemic wanes and regular business practices resume.
Meanwhile, GSK's confidence also translates to its planned restructuring, initiated by Walmsley, which will split the drugmaker into two companies—one focused on biopharma and the other on consumer products.
The two-year process is “well underway” and remains on track for its 2022 deadline, Walmsley told analysts. GSK plans to host a meeting in late June where it will lay out “a clear view of the strategy” for the revamped company, including growth opportunities and timing updates.
GSK has suffered a number of disappointments since the start of the year and throughout the COVID-19 pandemic when it failed to develop a vaccine as quickly as its competitors, bringing Walmsley’s leadership into question.
Earlier this month, hedge fund Elliott Management, which has a history of agitating for change at troubled biopharma companies, took a “significant” position in GSK. Some believe the group could push for Walmsley to run the spun-off consumer health business, the Financial Times reports.
While the GSK chief wouldn’t comment on Elliott specifically, Walmsley reiterated that GSK remains “very committed to the pathway” the company has laid out and remains “undeterred.”